Q2 2026 BOS Better Online Solutions Ltd Earnings Call

August 20, 2026

Speaker #1: BOS is led by an experienced executive team of eight and a board of four, including a former head of procurement for the Israeli Ministry of Defense.

Speaker #1: Given our technology focus, we have two dedicated CTOs—one for robotics and one for RFID. In total, we're a team of 80 professionals, with 30% being engineers and technicians.

Speaker #1: Thank you for watching. Ladies and gentlemen, welcome to the BOS Q2 Investor Summit. Thank you for joining us today. Before we begin, a brief reminder that this call contains forward-looking statements relating to BOS's business, financial condition, and results of operations.

Operator: Before we begin, a brief reminder that this call contains forward-looking statements relating to BOS's business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand, pricing, market acceptance, economic conditions, and technology development, as further detailed in the company's filings with the various securities authorities. Before I turn things over to management, I would like to give a brief recap of the results we just released. The growth momentum continued. Q2 2026 revenue grew 29% year-over-year, helping offset a softer Q1 2026 and bringing trailing 12-month revenue to the same level as our record 2025 revenue. We anticipate that full year 2026 revenue will exceed full year 2025 revenue.

Speaker #1: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand; pricing; market acceptance; economic conditions; and technology development.

Speaker #1: As further detailed in the company's filings with the various securities authorities. Before I turn things over to management, I would like to give a brief recap of the results we just released.

Speaker #1: The growth momentum continued. Second quarter 2026 revenue grew 29% year over year, helping offset a softer first quarter of 2026, and bringing trailing 12-month revenue to the same level as our record 2025 revenue.

Speaker #1: We anticipate that full-year 2026 revenue will exceed full-year 2025 revenue. Our backlog remained at a record $31 million as of the end of the second quarter of 2026.

Operator: Our backlog remained at a record $31 million as of the end of Q2 2026. Approximately $20 million of the backlog is scheduled for delivery by year-end. Together with H1 revenue, this amount represents approximately 91% of our full year 2025 revenue. Despite the increase in our operating expenses due to the dollar's devaluation, we believe we will offset this through revenue growth and improved gross profit margins. As a result, we expect net income for full year 2026 to exceed $3.6 million we achieved in year 2025. Our balance sheet is solid. Shareholders' equity stands at $30.9 million, and cash stands at $10 million. That gives us the flexibility to capitalize on organic and M&A opportunities.

Speaker #1: Approximately $20 million of the backlog is scheduled for delivery by year-end. Together with first-half revenue, this amount represents approximately 91% of our full year 2025 revenue.

Speaker #1: Despite the increase in our operating expenses due to the dollar's devaluation, we believe we will offset this through revenue growth and improved gross profit margins. As a result, we expect net income for full year 2026 to exceed the $3.6 million we achieved in 2025.

Speaker #1: Our balance sheet is solid—shareholders' equity stands at $30.9 million, and cash stands at $10 million. That gives us the flexibility to capitalize on organic and M&A opportunities.

Speaker #1: BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet, and exposure to some of the strongest structural trends in the global economy.

Operator: BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet, and exposure to some of the strongest structural trends in the global economy: defense spending, automation, and supply chain modernization. Yet, BOS currently has a market capitalization of approximately $31 million, and its enterprise value, market cap less cash, is approximately $21 million. For comparison, the Russell Microcap Index trades at approximately 2x book value versus BOS trades 1x book value. Russell Microcap Index price to earnings ratio of roughly 16x compared to our roughly 9x. Thank you for watching. Now I will turn the call over to Eyal Cohen, CEO.

Speaker #1: Defense spending, automation, and supply chain modernization. And yet, BOS currently has a market capitalization of approximately $31 million, and its enterprise value—market cap less cash—is approximately $21 million.

Speaker #1: For comparison, the Russell Microcap Index trades at approximately 2 times book value, whereas BOS trades at 1 time book value. The Russell Microcap Index has a price-to-earnings ratio of roughly 16 times, compared to our roughly 9 times.

Speaker #1: Thank you for watching. Now, I will turn the call over to Eyal Cohen, CEO.

Speaker #2: Good morning. Great to see you again at our quarterly conference. Joining me today is Moshe, our Chief Financial Officer. I am pleased to see the strong participation today, including many new names following the recent virtual conferences we participated in during May, June, and July.

Eyal Cohen: Good morning. Great to see you again in our quarterly conference. Joining me today is Moshe.

Moshe Zeltzer: Hi

Eyal Cohen: our Chief Financial Officer. I am pleased to see strong participation today, including many new names following the recent virtual conferences we participated in during May, June, and July. Let me start by sharing a few thoughts on how the business is progressing. I am very pleased with our financial performance, financial position, management team, board members, and the growth opportunities in front of us. This has given us the confidence to grow year after year, and we remain focused on continuing that trend. I am pleased that the commercial market in Israel has recovered as reflected in the 17% growth in our RFID revenue in the H1 of the year as compared to the comparable period. Demand in the defense segment continues to be strong, as reflected in our record backlog, most of which relates to our supply chain division.

Speaker #2: Let me start by sharing a few thoughts on how the business is progressing. I am very pleased with our financial performance, financial position, management team, board members, and the growth opportunities in front of us.

Speaker #2: This has given us the confidence to grow year after year, and we remain focused on continuing that trend. I am pleased that the commercial market in Israel has recovered, as reflected in 17% growth in RFID revenue in the first half of the year compared to the comparable period.

Speaker #2: Demand in the defense segment continues to be strong, as reflected in our record backlog, most of which relates to our Supply Chain division. The penetration of our Robotics division into more factories in the defense segment is going very well.

Eyal Cohen: The penetration of our robotics division into more factories in the defense segment is going very well. We are successfully implementing AI within BOS for internal use to improve our operational efficiency and in software development for commercial use, commercial sale. I believe these steps will yield improved operational EBITDA margins and support our revenue growth.

Speaker #2: We are successfully implementing AI within BOS for internal use to improve our operational efficiency, as well as in software development for commercial use and commercial sale. I believe these steps will yield improved operational margins and support our revenue growth.

Speaker #3: On the financial front, despite 30% growth in total revenue between Q1 2026 and Q2 2026, cash remained roughly unchanged at $10 million.

Moshe Zeltzer: On the financial front, despite 30% growth in the total revenue between Q1 2026 and Q2 2026, cash remained roughly unchanged at $10 million. We grew without needing to borrow cash, which is a strong indication of highly efficient cash management, with our vendors helping to finance our clients. We will deploy this cash to support our external growth through M&A. On the M&A front, we have several opportunities on the table that we have been evaluating carefully.

Speaker #3: We grew without needing to burn cash, which is a strong indication of highly efficient cash management, with our vendors helping to finance our clients.

Speaker #3: We will deploy this cash to support our external growth through M&A. On the M&A front, we have several opportunities on the table that we have been evaluating carefully.

Speaker #2: On the IO side, in May we presented at the MicroCap Club Virtual Summit, and in June we participated in the iAccess Alpha Virtual Summit. In July, we hosted our first investor webinar.

Eyal Cohen: On the IR side, in May, we presented at the MicroCapClub, a virtual summit, and in June, we participated in the iAccess Alpha Virtual Summit. In July, we hosted our first investor webinar. We are going to participate in the Sidoti conference scheduled for the end of September. In September, we will also join a non-deal roadshow to ThinkEquity clients. During July and August, we released three announcements on the major contract. In recent months, we have became active online on Facebook, LinkedIn, X, and via email, and we plan to increase our investment in those channels. I will send you the link to our pages, and you are welcome to follow and share. We are hopeful those activities will help close the gap in our valuation.

Speaker #2: We are going to participate in the Sidoti Conference scheduled for the end of September. In September, we will also join a non-deal roadshow to ThinkEquity clients.

Speaker #2: During July and August, we released three announcements on major contracts. In recent months, we have become active online—on Facebook, LinkedIn, X, and via email.

Speaker #2: And we plan to increase our investment in those channels. I will send you the link to our pages, and you are welcome to follow and share.

Speaker #2: We are hopeful those activities will help close the gap in our valuation. With that, I want to thank you again for your continued confidence and support in BOS as we carry this momentum into the second half of the year.

Eyal Cohen: With that, I want to thank you again for your continued confidence and support in BOS as we carry this momentum into the H2 of the year. Thank you for listening. We will now be happy to open the call for questions. Please unmute yourself if you want to ask a question.

Speaker #2: Thank you for listening. We will now be happy to open the call for questions. Please unmute yourself if you want to ask a question.

Speaker #4: Good morning, Eyal. Good morning, Moshe. Congratulations on a fantastic quarter. Regarding one of your recent orders, it was in the semiconductor industry. Is that a one-time order, or do you see more orders occurring from that industry?

[Analyst]: Good morning, Eyal. Good morning, Moshe. Congratulations on a fantastic quarter. Regarding one of your recent orders that was in the semiconductor industry, is that kind of a one-time order, or do you see more orders occurring from that industry?

Speaker #2: We have to understand that once we announce a contract that relates to the supply chain division, on the back of it, there is a design work of embedding our components into the client's product that is in the development process.

Eyal Cohen: We have to understand that once we announce on a contract that relates to the supply chain division, on the back of it, there is a design work of embedding our components into the client's product that is in development process. Actually, we work on that order a year ago. Once the product starts the mass production, then we start to get the orders. So we expect as long as the product is alive, the orders will follow.

Speaker #2: Actually, we worked on that order a year ago. So once the product starts mass production, then we start to get the orders. So we expect that as long as the product is alive, the orders will follow.

Speaker #4: Okay. And can you kind of give an update on your progress in India? I know that's becoming a large part of your next year.

[Analyst]: Okay. Can you give an update on your progress in India? I know that is becoming a large part of your revenues, and where do you see that progressing over the next year?

Speaker #2: Yeah, we are very pleased with the progress of our team in India. They are doing a very good job. They are reaching out to a client that we have never been in contact with before.

Eyal Cohen: Yeah, we are very pleased with the progress of our team in India. They are doing a very good job, and they are reaching to a client that we have never been in contact with. I am sure that it will yield to additional. It will support the growth of BOS in India in 2026.

Speaker #2: And I am sure that it will yield additional support for the growth of BOS in India in the year 2027.

Speaker #4: Okay. And my final question is regarding M&A. Do you still plan to make any M&A activity non-dilutive to shareholders and finance that with existing cash and bank loans?

[Analyst]: Okay, and my final question is referring to M&A. You still plan to make any M&A activity non-dilutive to shareholders and finance that with existing cash and bank loans, is that correct?

Speaker #4: Is that correct?

Speaker #2: That's correct, sir. Actually, we are planning to do an M&A, but as you know, in the recent two or three years, we have not succeeded in closing a deal because it didn't match our criteria.

Eyal Cohen: That's correct, Todd. Actually, we are planning to do an M&A, but as you know, in the recent two or three years, we have not succeeded to close a deal because it doesn't match to our criteria, especially for the first criteria, that it should be a company with a solid history of profits and a positive outlook. We have several opportunities on the table. We are checking it. We are in negotiations with several companies. Hopefully, one of them will be closed. Of course, we have the financial policy how to finance those deals. As I mentioned before, we have $10 million in the cash in hands. So if we are buying a profitable company, there is no reason why the bank won't participate at 50% of the financing. So we actually can reach to maximum acquisition value of $20 million. So we are all set.

Speaker #2: Especially for the first criteria, that it should be a company with a solid history of profits and a positive outlook. We have several opportunities on the table.

Speaker #2: We are checking it, and we are in negotiations with several companies. Hopefully, one of them will be closed. And of course, we have the financial policy—how to finance; we have the policy for how to finance those deals, as I mentioned before.

Speaker #2: We have, like, $10 million in cash on hand. So if we are buying a profitable company, there is no reason why the bank won't participate at 50% of the financing.

Speaker #2: So we actually can reach a maximum acquisition value of $20 million. So we are set.

Speaker #4: Well, thank you, all. Hop back in the queue. Congratulations again on a great quarter. Thank you.

[Analyst]: Well, thank you. I'll hop back in the queue. Congratulations again on a great quarter. Thank you.

Speaker #2: Thank you, sir. I'm looking forward to meeting you in Israel.

Eyal Cohen: Thank you, Todd. I am looking forward to meet you in Israel.

Speaker #3: Thank you.

[Analyst]: Thanks.

Speaker #5: Good morning, Eyal. It's Scott Weiss. How are you?

Scott Weiss: Good morning, Eyal. It is Scott Weiss. How are you?

Speaker #2: Fine, thank you. How are you, Scott?

Eyal Cohen: Fine. Thank you. How are you, Scott?

Speaker #5: Good, thanks. Nice quarter. My question is on the RFID division. It was up a nice 17.5% year-over-year; it bounced back. Was that a function of the easy comp year-over-year, or are you seeing some kind of a positive change there?

Scott Weiss: Good, thanks. Nice quarter.

Eyal Cohen: Thank you.

Scott Weiss: My question is on the RFID division. It was up a nice 17.5% year-over-year. It bounced back. Was that a function of the easy comp year-over-year, or are you seeing some kind of a positive change there?

Speaker #2: Yeah, we see a positive change. We actually—we expected, we were expecting that, and it happened. It's a little bit silent here in Israel, and it stands.

Eyal Cohen: Yeah, we see a positive change. Actually, we were expecting for that, and it happened. A little bit silent here in Israel than it comes. There is a rebound in the market. The demand starts very strong. We see a recovery. Hopefully, it will continue for a long time after three years of like to be in a halt position. For 2026, I am bullish on 2026 for the RFID division.

Speaker #2: There is a rebound in the market. The demand starts very strong. We see a recovery. Hopefully, it will continue for a long time. After three years of, like, being in a hold position.

Speaker #2: So, for year 2026, it looks very—I'm bullish on year 2026 for the RFID division.

Speaker #5: And the same question for the Supply Chain segment. Revenues were down 6% or so. Is there any insight you can give us as to why it was down?

Scott Weiss: The same question for the supply chains segment. Revenues were down 6% or so. Is there any insight you can give us as to why it was down?

Speaker #2: No, as you saw, the fluctuation in this division is significantly high. As you remember, in the first quarter we were below the comparable quarter last year, and if I remember correctly, it was about 17% less.

Eyal Cohen: No, as you saw, the fluctuation in this division are significantly high. As you remember, in Q1, we were below the comparable quarter last year in about, if I remember correctly, it was like 17% less. Then here in Q2, we succeeded to close the gap. So we know that our clients in the defense segment will buy our components, but we are not controlling on the rate of consumption. So there could be fluctuation. Because of that, I am not giving importance to the 5% decrease. More than this, we have a very strong backlog, that $31 million, which is a record backlog. By the way, despite 30% growth in revenues from Q1 to Q2, the backlog still remained on the same level of $31 million it was at the end of Q1.

Speaker #2: And then here in the second quarter, we succeeded to close the gap. So we know that our clients in the defense segment will buy our component, but we are not controlling the rate of consumption.

Speaker #2: So there could be fluctuation; because of that, I'm not giving importance to the 5% decrease. More than this, we have a very strong backlog at $31 million, which is a record backlog.

Speaker #2: By the way, despite a 30% growth in revenues from Q1 to Q2, the backlog still remains at the same level of $31 million as it was at the end of the first quarter.

Speaker #2: So yeah, consolidated, sure. So out of the 31 million dollars we have 20 million dollars for delivery by the year end. So we did a calculation and based on that we provided positive outlooks that we will exceed the 51 million dollars in year 2026.

Scott Weiss: Consolidated.

Eyal Cohen: Yeah, consolidated. So out of the $31 million, we have $20 million for delivery by the year-end. So we did a calculation, and based on that, we provided positive outlook that we will exceed the $51 million in 2026.

Speaker #5: Okay, great. Thank you.

Scott Weiss: Okay, great. Thank you.

Speaker #2: Thank you, Scott.

Eyal Cohen: Thank you, Scott.

Speaker #4: I It's okay. It's okay.

Jim Cahn: Hi, this is Jim Cahn.

Scott Weiss: You can go ahead. It is okay.

Jim Cahn: Okay.

Eyal Cohen: Who is going to be the first one? Kevin?

Speaker #3: Well, it's going to be the first one. It's Ben, Kevin.

Jim Cahn: Yes, please.

Eyal Cohen: I think Kevin was the one.

Speaker #5: Okay, hi. This is Kevin from Alliance Global Partners. Thanks for taking our questions. As a follow-up on M&A, could you speak to what are kind of the gating factors?

[Analyst] (Alliance Global Partners): Okay. Hi, this is Kevin from Alliance Global Partners. Thanks for taking our questions. As a follow-up on M&A, could you speak to what are kind of the gating factors in it? Would it be finding targets, price expectations, or the financing capacities?

Speaker #5: And would it be finding targets, price expectations, or the financing capacities?

Speaker #2: I'm not sure I got your question. Can you repeat it? The line is not so clear. Can you repeat, please?

Eyal Cohen: I am not sure I got your question. Can you repeat because the line is not so clear? Can you repeat, please?

Speaker #5: Yeah, sure. As a follow-up to the earlier M&A question, could you kind of speak to what are some of the gating factors on closing a deal?

[Analyst] (Alliance Global Partners): Yeah, sure. As a follow-up to the earlier M&A question, could you speak to what are some of the gating factors on closing a deal? Would that be finding targets, price expectations, or the financing capacity?

Speaker #5: Would that be finding target price expectations, or the financing capacity?

Speaker #2: Yes. So the criteria are, as I mentioned, that the cap on acquisition of investment will be $20 million. The criteria are that there should be a synergy to our core business.

Eyal Cohen: Yes. The criteria are, as I mentioned, that the cap of acquisition of investment will be $20 million. The criteria that there should be a synergy to our core business. The synergy could be a range of synergy. How much is a 50% synergy, 100%, full synergy. We have a flexibility on that issue, on that criteria. Regarding the financial position, the financial performance or the performance of the company, we are checking that. In the recent three to five years, the company presented consecutive profits, and there is positive outlook, going forward. Regarding the multiple, the valuation, the thing that we have on the table, the multiple on the EBITDA is between 5 to 6. This is the range of valuation we are talking about.

Speaker #2: And the synergy could be a range of synergy—how much is a 50% synergy, 100%, full synergy. So we have a flexibility on that issue.

Speaker #2: On that criteria, regarding the financial position, the financial performance, or the performance of the company, we are checking that, in the recent three or three to five years, the company presented consecutive profits.

Speaker #2: And there is a positive outlook going forward. And regarding the multiple, the valuation, we are—the thing that we have on the table—the multiple on the EBITDA is between 5 to 6.

Speaker #2: This is the range of valuation we are talking about.

Speaker #5: Got it, thanks. And then as a follow-up, you've announced about $4.7 million in new orders since late July, on top of the $7.1 million from India and the US through May.

[Analyst] (Alliance Global Partners): Got it. Thanks. As a follow-up, you have announced about $4.7 million in new orders since late July on top of the $7.1 million from India and the US through May. Your guidance has stayed pinned around that $3.6 million range, which is flat to last year. Could you walk me through that bridge? Is it incremental revenue being absorbed by shekel in the mix? Specifically, what has to change? Would that be FX pricing or mix for this momentum to break through to the bottom line in 2027?

Speaker #5: And your guidance has stayed pinned around the $3.6 million range, which is flat to last year. Could you walk me through that bridge? Is it incremental revenue being absorbed by shekel in the mix?

Speaker #5: And then, specifically, what has to change? Would that be FX, pricing, or mix for this momentum to break through to the bottom line in 2027?

Speaker #2: Yeah. So in this PR, this press release, we just announced that we will exceed the $3.6 million. And usually, we don't provide exact percentages of growth.

Eyal Cohen: Yeah. In this PR, this press release, we just announced that we will exceed the $3.6 million. Usually, we do not provide exact percentage of growth. Usually, we use that we will exceed, like we are doing in the revenue, that we will exceed the $51 million, and we will exceed the $3.6 million. But still, there is a challenge we are facing with the devaluation of the US dollar. As you saw in H1, it increased our operational expenses by about $600,000.

Speaker #2: Usually, we use that we will exceed—like we did and like we are doing—in the revenue, that we will exceed the $51 million, and we will exceed the $3.6 million.

Speaker #2: However, we are still facing a challenge with the devaluation of the US dollar. As you saw in the first half of the year, it increased our operational expenses by about $600,000.

Speaker #2: It's yeah, it increased the operational expenses by 600,000 dollars. So it's an annual basis, it's like 1.2 million dollars. So we have to find a way to compensate it in order not to be not in order to generate profits that will be higher than year 2025, higher than the 3.6 million dollars.

Scott Weiss: Yeah.

Eyal Cohen: Yeah. It increased the operational expenses by $600,000. On annual basis, it is like $1.2 million. We have to find way to compensate it in order to generate a profit that will be higher than year 2025, higher than the $3.6 million. We can work on internal efficiency, and we are doing it mainly with the assistance of the AI tools to improve our operational efficiency. But to improve our operational efficiency by $1.2 million a year, it will be very tough. We are doing it by operational efficiency, by increasing the gross profit margin of our product in order to compensate, and we are increasing our revenues. If you increase the revenues and you work with all those points together, this is a assumption for our outlook for exceeding the $3.6 million.

Speaker #2: So we can work on internal efficiency, and we are doing it mainly with the assistance of AI tools to improve our operational efficiency.

Speaker #2: But to improve our operational efficiency by $1.2 million a year will be very tough. So we are doing it by increasing operational efficiency and by raising the gross profit margin of our products in order to compensate.

Speaker #2: And we are increasing our revenues. So if you increase the revenues, and you work with all those points together, this is an assumption for our outlook for exceeding the $3.6 million.

Speaker #5: Got it. Thanks a lot.

[Analyst] (Alliance Global Partners): Thanks a lot.

Speaker #2: Thank you, Kevin.

Eyal Cohen: Thank you, Kevin.

Speaker #4: Hi, Eyal.

Jim Cahn: Hi, Eyal.

Speaker #2: Hello.

Eyal Cohen: Hello.

Speaker #3: Hi.

Jim Cahn: Hi. Jim Cahn here. In a previous conference call, you suggested that you were open to the possibility of a new name for your company, because BOS BETTER ONLINE SOLUTIONS LTD is awkward at best and a little inaccurate and a little bit silly. I have been working on this and giving it some thought and consulting with people, and I believe the best solution is an organic one, something that you are already known by. I suggest BOSC, your symbol, as the name for the company.

Speaker #4: James Kahn here. In a previous conference call, you suggested that you were open to the possibility of a new name for your company, because "Better Online Solutions" is awkward at best, and a little inaccurate and a little bit silly.

Speaker #4: So I have been working on this, giving it some thought, and consulting with people. I believe the best solution is an organic one—something that you're already known by.

Speaker #4: So I suggest BOSQ, your symbol, as the name for the company.

Speaker #2: I totally agree with you. I think, why Bosque? Because it's also Bosque Coin. So it's okay. It's great. Yeah, but I agree. All the investors know the name Bosque, and they know the ticker.

Eyal Cohen: I totally agree with you. I think, you know why BOSC? Because it is also BOS coin.

Eyal Cohen: It is okay. It is great. Yeah, but I agree. All the investors know the name BOS, they know the ticket. I totally agree with you, and if I will not get any other recommendation from our shareholders that can send me emails and other suggestions, I think we will go for it, on it.

Speaker #2: I totally agree with you. And if I won't get any other recommendation from our shareholders, that can send me emails, and other suggestions, I think I will go we will go for it on it.

Speaker #4: Thank you.

Jim Cahn: Thank you.

Speaker #2: Great idea. Thank you. Are there any further questions?

Eyal Cohen: Great idea. Thank you. Any further questions?

Speaker #5: Okay. This is Igor Novgorodtsov and nice talking to you again, especially after a strong quarter. I want to touch upon gross margins. So the gross margins I don't have it really in front of me right now, but they seem to be kind of being a little bit flat while your revenue is growing.

Igor Novgorodov: This is Igor Novgorodov, and nice talking to you again, especially after a strong quarter. I want to touch upon gross margins. The gross margins, I do not have it really in front of me right now, but they seem to be kind of being a little bit flat while your revenue is growing. Is gross margins affected by RFID versus supply chain mix? Maybe you can give us, I know you do not disclose them exactly, but maybe you can walk us a little bit through that. Or are they affected by taxes? Do you think your gross margins can improve while your revenue is growing?

Speaker #5: Is gross margin affected by RFID versus supply chain mix? Maybe you guys can— I know you don't disclose them exactly, but maybe you can walk us a little bit through that.

Speaker #5: Or are they affected by FX? Also, do you think your gross margins can improve while your revenue is growing?

Speaker #2: I think the gross margin we are working with will improve because of what I just mentioned before, since we have to compensate for the effect of the devaluation of the US dollar.

Eyal Cohen: I think the gross margin, we are working that the gross margin will improve because what I just mentioned before, because we have to compensate on the effect of the devaluation of the US dollar. We are working extensively with our clients to increase the sales price. I have to tell you that since the beginning of the year, all the salesperson, all the sales team, increasing prices in order to compensate it. I am following, we are following month by month. Our expectation are that our gross profit margin will increase. But in certain cases, when we have, there could be a huge transaction, especially in the supply chain, for a certain kind of product that the gross profit margin could be lower. It is a matter of negotiation with a client.

Speaker #2: So, we are working extensively with our clients to increase the sales price. I have to tell you that since the beginning of the year, all the salespeople—all the sales team—have been increasing prices.

Speaker #2: In order to compensate it. So, and I am following, I am following, we are following month by month. So our expectation is that our gross profit margin, going ahead, will increase.

Speaker #2: But in certain cases, when we have—there could be a huge transaction, especially in the supply chain for a certain kind of product, that the gross profit margin could be lower.

Speaker #2: It's a price of it's a matter of negotiation with the client. So and I hope it won't it won't decrease it won't lower the average of our it won't lower the average of the gross profit margin that we expecting.

Eyal Cohen: I hope it will not decrease, it will not lower the average of the gross profit margin that we expecting. In general, we are expecting higher gross profit margins.

Speaker #2: So, in general, we are expecting higher gross profit margins.

Speaker #5: Does it apply just to supply chain, or does it also equally apply to RFID?

Igor Novgorodov: Does it apply to just supply chain or it also equally applies to RFID?

Speaker #2: Yes. So I mentioned the supply chain because in the supply chain there are huge transactions. There could be a transaction like of it's 2 million dollars one and a half million dollars that can affect significantly on a specific quarter.

Eyal Cohen: Yeah. I mentioned the supply chain, because in the supply chain, there are huge transactions. There could be a transaction like of $2 million, $1.5 million, that can affect significantly on a specific quarter. In the RFID, the transactions are much lower, could be like quarter million dollars, $100,000, half million dollars maximum. Because of that, I mentioned just the effect of certain transaction of the supply chain.

Speaker #2: In the RFID, the transactions are much lower. It could be like a quarter million dollars, $100,000, or a half million dollars maximum. So because of that, I mentioned just the effect of certain transactions on the supply chain.

Speaker #5: For the RFID division, apart from, obviously, the issues that Israel has been in various stages of war in the last few years, you had a specific company—if you remember—that last year you were restructuring your RFID division.

Igor Novgorodov: For RFID division, apart from obviously the issues that Israel has been in various stages of war in last few years, you had specific companies. I remember that last year you were restructuring your RFID division. Is this restructuring over, or we expect some significant further improvements, or how much did it change from the last year?

Speaker #5: Is this restructuring over, or should we expect some significant further improvements? And how much did it change from last year?

Speaker #2: Yes, it was improved. It's not a company under RFID; it's a unit under RFID.

Eyal Cohen: Yeah, it was important. It is not a company under the RFID, it is a unit under the RFID.

Speaker #5: Right.

Igor Novgorodov: Right.

Speaker #2: And we are we have done we have been doing a great work there. And a great progress. And it's absolutely the performance now are much better than we had in the parallel in the comparable period last year.

Eyal Cohen: We have been doing a great work there and a great progress, and it is absolutely, the performance now are much better than we had in the comparable period last year. But still we have work to do. But this unit will be profitable in 2026 as opposed to 2025. There is a certain unit in the RFID, the RFID in general is a profitable division. The certain specific unit that caused us some losses, decreased our net income in the RFID division, I think now the situation is much, much more better.

Speaker #2: And, but still, we have work to do. But this unit will be profitable in year '26 as opposed to year '25. The certain unit in the RFID—the RFID in general is a profitable division.

Speaker #2: The certain specific unit that caused us such that caused us some losses decreased our not income net income in the RFID division, I think now the situation is much, much more better.

Speaker #5: Is RFID more or less a function of if Israel is in a state of war, or if it is relatively quiet? Because, obviously, RFID has done much better in Q2 than in Q1.

Igor Novgorodov: Is RFID more or less a function of if Israel in a state of war, or if Israel is quiet? Because obviously RFID has done much better in Q2 than in Q1, or there are other significant factors?

Speaker #5: Or are there other significant factors?

Speaker #2: I think the RFID is 100% affected by the Israeli commercial market. As I mentioned before, we are in the process of penetrating with the RFID into the defense segment.

Eyal Cohen: I think the RFID is 100% affected by the Israeli commercial market. As I mentioned before, we are in the process to penetrate with the RFID to the defense segment, and we hired a consulting company special for that mission. We also working to penetrate to hospitals, which is a growing segment in Israel and very stable like in all other places in the world. We are searching acquisition in that field. It is very tough. We are not finding, we do not even have the opportunity on the table. The other option is to set a team to build it from zero, from scratch. By that, to reduce the exposure of the RFID division to geopolitical events that put on hold the commercial segment in Israel.

Speaker #2: And we hired a consulting company especially for that mission. And we are also working to penetrate hospitals, which is a growing segment in Israel and is very stable, like in all other places in the world.

Speaker #2: We are searching for acquisitions in that field. It's very tough. We are not finding any. We don't even have the opportunity on the table. The other option is to set up a team to build it from zero, from scratch.

Speaker #2: So, and by that, to reduce the exposure of the RFID division to geopolitical events that put on hold the commercial segment in Israel.

Speaker #5: Okay, thank you very much. I don't have any more questions.

Igor Novgorodov: Okay. Thank you very much. I do not have any more questions.

Speaker #2: Thank you, Igor.

Eyal Cohen: Thank you, Igor.

Speaker #1: Thank you. Next.

Jim Cahn: Thank you.

Speaker #2: Are there any further questions? Okay. Thank you for your time and attention. Feel free to reach out if you would like to schedule a one-on-one session with us.

Eyal Cohen: Any other further questions? Thank you for your time and attention. Feel free to reach out if you would like to schedule with us a one-on-one session. Thank you very much. It was pleasure to see you again today.

Speaker #2: Thank you very much. It was a pleasure to see you again today.

Jim Cahn: Thank you. Have a great day.

Eyal Cohen: Thank you.